Sponsors (12)
The bill boosts available grant dollars and reduces tax uncertainty to speed broadband buildout in underserved areas, but it limits other tax benefits for grant-funded expenses and creates future tax and compliance trade-offs for recipients.
Recipients of BEAD and other IIJA broadband grants (especially providers serving rural, Tribal, and underserved communities) will not owe federal income tax on those grant amounts, leaving more grant dollars available to fund deployment and lowering the effective cost of projects so builds can proceed faster.
Clarifying that grant amounts are excluded from taxable income reduces tax uncertainty for grant recipients and investors, making planning and financing of broadband projects easier for small businesses and state/local programs.
Recipients who exclude grant amounts cannot claim deductions or tax credits for expenses paid with those excluded funds, which could reduce anticipated tax benefits and raise effective project costs for some recipients.
Recipients must reduce the adjusted basis of property by the amount of excluded grants, potentially increasing taxable gain on a later sale or reducing future depreciation deductions for property used in the projects.
New rules and required Treasury regulations could create administrative compliance burdens and costs for taxpayers, state and local governments, and mixed-funded projects adapting accounting and reporting practices.
Based on analysis of 2 sections of legislative text.
Excludes specified federal and pass-through broadband grants from taxable income while denying related deductions/credits and reducing basis for the excluded amounts.
Introduced March 5, 2025 by Mike Kelly · Last progress March 5, 2025
Excludes certain federal, state, Tribal, territorial, and local broadband grants and subgrants from taxable gross income for federal income tax purposes, while preventing recipients from getting a double tax benefit by disallowing deductions or credits for expenses to the extent those grants are excluded and by reducing the tax basis by the excluded amount. The Treasury Department must issue regulations to implement the new rule, which applies to taxable years ending after March 11, 2023.